Two major impediments in the study of neural plasticity are the lack of tools for monitoring electrical signals in very small compartments such as dendritic spines, and the limited methods for studying electrical activity in groups of interacting neurons. For these reasons many neuroscientists agree on the need for optical sensors of membrane potential that are easy to use, have limited photoxicity, and the speed and sensitivity required for detection of individual action potentials (APs) in single neurons. In this application we propose to develop and apply a novel two-component optical approach for sensing membrane potential, based on Fvrster resonance energy transfer (FRET). A critical feature of our method is that it relies on the widely used neuronal tracer dye, DiO, as a donor in the FRET reaction while dipicrylamine (DPA), a molecule whose membrane partitioning is voltage sensitive serves as the acceptor. Preliminary data show that large and rapid fractional fluorescence changes (56 % per 100 mV, D ~ 0.1 ms) are observed in response to membrane depolarization of cultured cells. In cultured neurons and in neurons in brain slices, AP-induced optical signals are nearly 3-fold larger than with any other reporter, making it possible to detect subthreshold activity and APs in single trials from membrane areas less than a square micron. The application is organized into three aims. Aim 1 proposes to further characterize the system, establishing the effectiveness of two-photon sources, and carefully measuring the effects of DPA on electrical excitability. Using a stationary laser spot approach, Aim 2 proposes to measure membrane potential in single dendritic spines, a subcellular compartment regarded as a key site of neural plasticity. Aim 3 utilizes diolistics to label groups of functionally similar neurons to demonstrate that the DiO/DPA system can be used to monitor activity in small neural circuits. The proposal seeks to establish a robust and flexible new method for non-invasive monitoring of electrical signal flow within single neurons and anatomically-defined neural circuits. We expect that this new experimental approach will enable rapid progress in the study of neural plasticity both in preparations that are genetically-amenable and those that are not.